The share price of Maruti Suzuki gained 5 percent on Tuesday after the automaker said it will raise car prices in the July-September quarter.
Maruti Suzuki, India’s largest manufacturer of passenger vehicles, said it will hike the prices of its cars in Q2 due to an increase in the input costs.
The stock surged as much as 5 percent to its day's high of Rs 7,241.85 per share.
The company did not reveal the quantum of the proposed price hike, however, it stated that the increase shall vary for different models.
“The cost of the company's vehicles continues to be adversely impacted due to increase in various input costs. Hence, it has become imperative for the company to pass on some impact of additional cost to customers through a price rise. The price rise has been planned in quarter 2 and the increase shall vary for different models,” Maruti Suzuki said in a statement.
The auto major has already increased its prices twice in 2021 and this will be the third one.
On April 16, Maruti Suzuki announced the weighted average price increase in ex-showroom prices (Delhi) across models of 1.6 percent. On January 18 this year, the automaker had announced a price hike of select models by up to Rs 34,000.
In May, the carmaker reported a 71 percent decline in total sales to 46,555 units as compared to 1,59,691 units in April as a spike in COVID-19 cases and lockdowns across various states hit dispatches.
Talking to CNBC-TV18, Shashank Srivastava, Senior ED, Marketing & Sales, Maruti Suzuki noted that steel prices have risen over 80 percent since last year. Since steel is is a large element of the cost of materials for any auto OEM, the rise in prices has fuelled the increase of material cost, he added.
“Rhodium, there has been an increase in demand across the world. China - the larger use of catalysers to meet the new emission norms across the world - requires the catalysers to have an increased quantity of these precious metals and not only the quantity has gone up but also the prices have gone up. Rhodium has surged from Rs 18,000-19,000 a gram last May to almost Rs 65,000 this May, which is a 250 percent increase and that is also something which is very difficult to absorb by any manufacturer,” Srivastava further stated.
First Published: IST